TMC Mining Corporation Zambia Ltd, is a Zambian resident subsidiary of TMC International, a foreign based Multinational Mining company. TMC is engaged in mining operations of base metals and industrial minerals. The group financial statements are prepared in United States Dollars.

Chief Executive Officer

The Chief Executive Officer of TMC Mining Ltd is ChazeLuhana, who is resident and ordinary resident in Zambia. Chaze has shareholdings of 5% in both TMC Mining Corporation Zambia Ltd and TMC International. In the year ended 31 December 2022, Chaze earned gross emoluments of K840,000. Chaze paid income tax of K289,592 under the Pay As You Earn system. She also paid NAPSA contributions of K14,662. In addition to the director's emoluments, Chazereceived net dividends of K40,300 from TMC International and dividends of K25,500 from TMC Mining Corporation Zambia Ltd. Chaze also holds shares in a Zambian resident private company, from which she received gross dividends of K30,000 (Withholding tax had been paid at source).

Chaze holds a fixed deposit account, with a bank in the foreign country in which TMC International is resident and owns commercial property in the same foreign country that has been let out to tenants in that country.

In December 2022, fixed deposit interest of K18,600 and rental income of K144,000 were credited to her Zambian account in respect of the above investments. The dividends were net of withholding tax at the rate of 38% deducted in the foreign country, whilst the fixed deposit interest and the rental income were net of withholding tax at the rate of 20%deducted in the same foreign country. There is no double taxation convention between Zambian and the foreign country in which TMC International operates. Any double taxationrelief is given by means of unilateral relief.

Financial Results for TMC Mining Corporation

The following summarised statement of profit or loss for the year ended 31 December 2022, has been extracted from the financial statements of TMC and all amounts are expressed inZambian Kwacha,

NoteK’000

Sales revenue(1) 920,000

Cost of sales(423,000)

Gross profit 497,000

Operating expenses(2)(137,252)

Finance cost(110,000)

Investment income(4) 17,125

Profit before tax266,873

Income tax expense(5)(51,000)

Profit for the year215,873

Additional information :

Note 1: Sales revenue

This comprises sales of cobalt for the year amounting to K140,000,000 being the norm value of the mineral for mineral royalty tax purposes, sales of industrial minerals for the yearamounting to K150,000,000 being the gross value of mineral for mineral royalty tax purposes. The remaining balance of the sales represents the norm value of copper sold during the year based on London Metal Exchange cash price which ranged from $7,600 to $8,100 per metric tonne throughout the tax year 2022.

Mineral royalty tax paid by the company during the year which was computed correctly and paid on the relevant due dates has not been included in the above statement of profit orloss.

Note 2: Operating expenses

Included in operating expenses are depreciation charges of K8,500,000 amortisation of intangible assets of K3,500,000, advertising expenses of K241,500, fines for breaching labourlaws of K252,000, salaries and wages of K26,400,000, expenses incurred on the

entertaining the board of directors of K191,000, employees subscriptions to the local fitness gym of K78,000, operating lease rentals of K850,000 for tipper trucks and K1,200,000incurred on the construction of a police post in the mine township. The balance represents miscellaneous allowable operating expenses.

Note 3: Investment income

Investment income represents fair value gains on investment property held by the company.

Note 4: Provisional Income Tax

The figure for the income tax expense in the statement of profit or loss shown above represents the provisional income tax paid by the company in the tax year 2022.

Note 5: Imported Mining Equipment

At 1 January 2022, the company held the following capital assets which were imported from foreign suppliers and paid for in US dollars a year ago. The original costs of the assets on the date of purchase translated into Zambian Kwacha were as shown below:

Asset Cost

Drilling equipment K3,400,000

Mining implementsK6,500,000

Note 6: Locally acquired implements, plant and machinery

At 1 January 2022, the company held the following assets which were acquired from local Zambian suppliers and paid for in Zambian Kwacha:

Asset ITV b/f Original Cost

K

Office equipment 350,000 700,000

Pool cars (2,000cc) 240,000 400,000

During the year ended the 31 December 2022, the company constructed a new smelting plant at a cost of K25,000,000. The company also acquired tipper trucks with a cost ofK12,500,000 under an operating lease agreement paying lease rentals of K850,000 shown in the statement of profit or loss above.

Note 7: Unrelieved Tax loss brought forward

The company has had the following results from its mining operations in the past two years:

Year ended 31 December 2020 2021

KK

Sales revenue 35,500,000 18,500,000

Tax adjusted Mining profit/(loss) (21,000,000) 8,400,000

Note 8: Indexation formula and other information

The indexation formula for capital allowances and mininglosses, where applicable, is given below:

The following Zambian Kwacha per US Dollar (ZMW/US$) average BOZ mid-exchange rates should be used where applicable:

Accounting Period Average BOZ Mid-Exchange rate

ZMW US$

Y/e 31 December 2020 K17.50

Y/e 31 December 2021 K18.00

Y/e 31 December 2022 K18.90

Required

(a) Show how the loss incurred in the year ending 31 December 2020 will be relieved in the tax year 2021 and determine the amount of the loss remaining unrelieved at31 December 2021. (4 marks)

(b) Compute the following amounts for the tax year 2022:

(i) The capital allowances claimable on the foreign acquired assets. (4 marks)

(ii) The total capital allowances on locally acquired assets and other qualifying mining expenditure.(4 marks)

(c) Calculate the final tax adjusted mining profit and the final company income tax payable by the company, for the tax year 2022. (16 marks)

(d) Calculate the income tax payable by Chaze Luhana for the tax year 2022.